Mastercard share price hits all-time high on back of earnings beat
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Mastercard share price hits all-time high on back of earnings beat

Global cashless transaction facilitator Mastercard posted quarterly profit that topped analysts’ expectations last Thursday. The driving force was an incredibly busy holiday period, which saw more people making big payments on their credit and debit cards than previous years. As a result, the company’s shares rose by more than 4% to hit an all-time high!

Mastercard’s share price has risen by 62% over the last 12 months

graph 0502 mastercard

SOURCE: Yahoo Finance

The health of the U.S. economy is fundamental to Mastercard’s business – and to that of its bigger rival Visa. When people have good credit scores and enough extra cash to splurge on things, credit and debit cards come into their own. Over the last quarter, the world’s biggest economy has been in fine shape – and that helped drive Mastercard’s results.

Mastercard earned $1.14 per share last quarter, beating analysts’ expectations of $1.12 per share. Its net income fell by 76%, but this was due to the impact of the U.S. tax reform, which saw the company stump up $981 million in charges. Meanwhile, Mastercard’s net revenue surged by 20.2% against the same period a year ago, demonstrating a strong underlying business.

The company’s chief executive, Ajay Banga, was eager to discuss the new business that Mastercard was capturing on the company’s earnings call. He told listeners:

We’ve added 500 new issuers and 21 markets over the course of 2017. I mean now a total of 1,200 issuers in 46 markets. For the year, we saw tokenized transaction growth of over 500%. Now, not from a small base, but it reflects this momentum that I’m speaking to. And last year, we continued to see how important this seamless digital purchasing experience is to our merchant partners as we grew Masterpass acceptance with Dunkin' Donuts, Walgreens, Verizon Wireless, and many others.

Disclosure

Dominion holds Mastercard in its Global Trends Ecommerce Fund.


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